NEW YORK — Stocks were mostly lower in afternoon trading as another tick up in bond yields gave investors pause. Wall Street continues to look to Washington, where economic data, comments out of the Federal Reserve and President Joe Biden’s stimulus package remain front and centre.
The S&P 500 index was down 0.3% as of noon Eastern. The Dow Jones Industrial Average was up 98 points, or 0.3%, to 31,489 and the technology-heavy Nasdaq lost 1%.
Banks benefited from the increase in bond yields, which allows them to charge higher rates on mortgages and many other kinds of loans. The yield on the benchmark 10-year Treasury note rose to 1.48% from 1.41%.
Goldman Sachs rose 2% and JPMorgan rose 2.5%, while Wells Fargo and Citigroup both rose more than 3%. The KBW Bank Index, a measure of the 24 largest banks, was up more than 2%.
“The 10-year yield is saying the economy is going to get stronger,” said Ryan Detrick, chief investment strategist for LPL Financial.
Treasury yields hit the psychologically important 1.50% mark last week, as investors have braced for stronger economic growth but also a possible increase in inflation.
“The good news to remember is there are other groups taking the baton,” Detrick said, adding that technology stocks are slipping while banks and energy companies benefit. “Some higher inflation at the beginning of a new economic expansion is perfectly normal,” Detrick said.
Despite the rollout of millions of doses of coronavirus vaccines weekly, the U.S. economy continues to struggle. Payroll processor ADP released a report Wednesday showing that private employers created only 117,000 jobs in February, far below economists’ forecasts.
On Tuesday, Federal Reserve Governor Lael Brainard sought to calm financial markets by emphasizing that the Fed, while generally optimistic about the economy, is still far from raising interest rates or reducing its $120 billion a month in asset purchases.
Federal Reserve Chair Jay Powell will speak Thursday on monetary policy as well. Investors heard from him last week when he testified in front of Congress, but the format — a question-and-answer session with The Wall Street Journal — is likely to be more illuminating than Powell’s calculated answers to politicians.
The big piece of data investors will get will be the February jobs report on Friday. Economists surveyed by FactSet expect employers created 225,000 jobs last month, but with the disappointing economic data, investors are likely to dampen their outlooks. The report also includes numbers for how much wages are rising across the economy, a key component of inflation.
Las Vegas Sands climbed 2.1% after the casino and resort operator announced it would sell its Las Vegas properties to a private equity firm. The company, which will drop “Las Vegas” from its name, will focus on its holdings in Asia.
Google’s parent company fell 1% after the company said it would stop using customers’ Internet browsing data to target and sell ads starting next year, responding to years of criticism from privacy advocates who have said the company is too invasive into its users’ personal lives.
